Homes rise £1,200 in sellers' market

The lack of homes for sale led to the biggest monthly leap in house prices for almost three years, according to figures released today.

The latest report from property research firm Hometrack showed that the cost of the average home rose by £1,200 in February to £172,000, as the sellers' market continued in London and the South East.

It said that the 0.7% hike was the biggest monthly increase since May 2004 and pushed annual inflation up to 6.4%.

While the number of homes registered with estate agents rose by 14% in February, the number of potential buyers on their books shot up by 23%.

Hometrack said this led to higher house prices across more than 40% of the country, although southern England saw prices rise in two-thirds of postcodes.

Richard Donnell, director of research at Hometrack, said: 'Despite the January rate rise it seems that a lack of supply is continuing to support higher prices.

Below average levels of property transactions as a proportion of overall housing stock are also acting as a support to prices.

'As a result we are seeing property transactions and pricing being set by those who can afford to move - that is to say existing owner occupiers, buy-to-let investors and the growing number of assisted first-time buyers.'

House prices rose by 1.3% in London during February, according to Hometrack, and by 0.9% in the South East, 0.7% in the South West, and 0.6% in East Anglia.

Prices rises were considerably smaller elsewhere, with Yorkshire and Humberside, Wales and the East Midlands seeing an increase of just 0.1%, the North and West Midlands showing rises of 0.2% and the North West growth of 0.3%.